TMI Tax Updates - e-Newsletter dated: January 4, 2012 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws


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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter January 4, 2012 Case Laws in this Newsletter: Income Tax Service Tax Central Excise Articles Limit for rectification, revision and reassessment proceedings are desirable for result orientation and ABC Control. Article on depreciation dichotomy between Accounting Standard and Tax laws on financial lease News Central Government issues Notification to Provide average Rates of Service Tax Refund for a wide Range of Goods Exported from India; Adds to E-Enabled Service Delivery to Exporting Community, Limits Public interface and Reduces Transaction Costs in obtaining Refunds Auction for Sale of Government Stocks Press Note Tariff Values of Edible Oils, Brass Scrap (all Grades) and Poppy Seeds Notified India’s Foreign Trade: November, 2011 Qualified Foreign Investors (QFIS) Allowed to Directly Invest in Indian Equity Market; Scheme to Help Increase the Depth of the Indian Market and in Combating Volatility Beside Increasing Foreign Inflows into the County Press Note - I-T DEPT NOT HARASSING INDIA INC: FINMIN Notifications Central Excise 45/2011 - dated 30-12-2011 - CE Amends Notification No.21 /2005-Central Excise, dated the 13th May, 2005 to affect the HSN changes w.e.f. 01.01.2012 44/2011 - dated 30-12-2011 - CE Amends Notification No. 26/2001-Central Excise, dated the 11th May, 2001 to affect the HSN changes w.e.f. 01.01.2012 43 /2011 - dated 30-12-2011 - CE Amends the various Notification to affect the HSN changes w.e.f. 01.01.2012 42/2011 - dated 30-12-2011 - CE Amends notification Nos. 62/1995-Central Excise, dated the 16th March, 1995 and 20/2005-Central Excise, dated the 13th May, 2005 to affect the HSN changes w.e.f. 01.01.2012 33/2011 - dated 30-12-2011 - CE (NT) Appointment of Central Excise Officers in relation to service tax refunds arising out of Notification No. 52/2011-Service Tax, dated 30.12.2011 32/2011 - dated 30-12-2011 - CE (NT) Amends Central Excise Rules, 2002 - Provisions for filing of central excise return in case of Manufacturers of processed yarn, unprocessed fabrics and readymade garments modified. 31/2011 - dated 30-12-2011 - CE (NT) Amends Notification No.16/2011-Central Excise (N.T.) - Manufacturers of processed yarn, unprocessed fabrics and readymade garments to file quarterly return in ER-3 for the period 1.10.2011 to 31.12.2011 30/2011 - dated 30-12-2011 - CE (NT) Amends Notification No. 49/2008-Central Excise (N.T.), dated the 24th December, 2008 to affect the HSN changes w.e.f. 01.01.2012 Customs 130/2011 - dated 30-12-2011 - Cus Seeks to amend notification no. 119/2010-Customs, dated 19th November, 2010 so as to revoke anti dumping duty on subject goods originating in or exported from Saudi Arabia 129/2011 - dated 30-12-2011 - Cus Amends Notification No.27/2011-Customs, dated the 1st March, 2011 128/ 2011 - dated 30-12-2011 - Cus Amends notification no. 53/2011-Cus dated 1-7-2011 so as to effect HSN changes as well as to provide deeper tariff cut to Malaysia. 127/ 2011 - dated 30-12-2011 - Cus Amends notification no. 46/2011-Cus dated 1-6-2011 so as to effect HSN changes as well as to provide deeper tariff cut to ASEAN nations. 126/2011 - dated 30-12-2011 - Cus Amends notification no. 116/2010-Cus dated 1-11-2010 (Special dispensation for Brunei Darussalam under ASEAN-India FTA). 125/2011 - dated 30-12-2011 - Cus Supersedes notification no 67/2006-Cus and 68/2006-Cus both dated 30-06-2006 and provides deeper tariff cuts to NLDCs (Srilanka & Pakistan) under SAFTA. 124/ 2011 - dated 30-12-2011 - Cus Amends notification no. 69/2011-Cus dated 29-07-2011 so as to effect HSN changes and to provide deeper cuts on two items namely tariff items 8408, 2020 and 870840. 123/ 2011 - dated 30-12-2011 - Cus Amends notification no. 152/2009-Cus dated 31-12-2009 so as to provides deeper tariff cuts as agreed under India-Korea CEPA and effects HSN changes as well. 122/ 2011 - dated 30-12-2011 - Cus Amends Notification No.151/2009-Customs, dated the 31st December, 2009 so as to effect HSN changes. 121 /2011 - dated 30-12-2011 - Cus Amends notification no. 28/1995-Cus dated 16-03-1995, 105/1999-Cus dated 10-08-1999, 26/2000-Cus dated 15-03-2000, 76/2003-Cus dated 13-05-2003, 72/2005-Cus dated 22-07-2005, 57/2009-Cus dated 30-05-2009 so as to effect HSN changes. 120 /2011 - dated 30-12-2011 - Cus Amends Notification No. 21/2002-Customs, dated the 1st March, 2002 119/ 2011 - dated 29-12-2011 - Cus Amends Notification No. 69/2004-Customs, dated the 9th July, 2004 118/ 2011 - dated 29-12-2011 - Cus Amends Notification No. 20/2006-Customs, dated the 1st March, 2006 117/2011 - dated 29-12-2011 - Cus Amends Notification No 25/1999-Customs, dated 28th February, 1999, 22/2007-Customs, dated the 1st March, 2007 and 27/2011-Customs, dated the 1st March, 2011 ORDER F.No.437/72/2010-Cus. IV - dated 3-1-2012 - Cus (NT) Appointment of Common Adjudicating Authority F.No.437/22/2011-Cus. IV - dated 2-1-2012 - Cus (NT) Appointment of Common Adjudicating Authority F.No.437/21/2011-Cus. IV - dated 2-1-2012 - Cus (NT) Appointment of Common Adjudicating Authority F.No.437/02/2011-Cus. IV - dated 2-1-2012 - Cus (NT) Appointment of Common Adjudicating Authority 89/2011 - dated 30-12-2011 - Cus (NT) Amends Notification No. 36/2001-Customs(N.T) dated the 3rd August 2001 - fixation of tariff value SEZ S.O. 2838(E) - dated 20-12-2011 - SEZ SEZ Act Under Section 4 - Set up a sector specific Special Economic Zone for information technology and information technology enabled service at Village Gangaikondan, Taluka Tirunelveli, District Trunelveli in the State of Tamil Nadu; VAT - Delhi F.7(400)/Policy/VAT/2011/1006-1018 - dated 28-12-2011 - DVAT Notification regarding e-payment for registered dealers and TAN holders Circulars / Instructions / Orders Service Tax F. No. 137/21/2011 - dated 19-12-2011 Telecommunication service - Clarification on taxability in respect of International Private Leased Circuit (IPLC) Highlights / Catch Notes Customs Amends Notification No. 36/2001-Customs(N.T) dated the 3rd August 2001 - Ntf. No. 89/2011 Dated: December 30, 2011 Visit to Get Source Seeks to amend notification no. 119/2010-Customs, dated 19th November, 2010 so as to revoke anti dumping duty on subject goods originating in or exported from Saudi Arabia - Ntf. No. 130/2011 Dated: December 30, 2011 Visit to Get Source Amends Notification No.27/2011-Customs, dated the 1st March, 2011 - Ntf. No. 129/2011 Dated: December 30, 2011 Visit to Get Source Amends Notification No. 21/2002-Customs, dated the 1st March, 2002 - Ntf. No. 120 /2011 Dated: December 30, 2011 Visit to Get Source Amends Notification No. 69/2004-Customs, dated the 9th July, 2004 - Ntf. No. 119/ 2011 Dated: December 29, 2011 Visit to Get Source Amends Notification No. 20/2006-Customs, dated the 1st March, 2006 - Ntf. No. 118/ 2011 Dated: December 29, 2011 Visit to Get Source Amends Notification No 25/1999-Customs, dated 28th February, 1999, 22/2007-Customs, dated the 1st March, 2007 and 27/2011-Customs, dated the 1st March, 2011 - Ntf. No. 117/2011 Dated: December 29, 2011 Visit to Get Source Amends Notification No 25/1999-Customs, dated 28th February, 1999, 22/2007-Customs, dated the 1st March, 2007 and 27/2011-Customs, dated the 1st March, 2011 - Ntf. No. 117/2011 Dated: December 29, 2011 Visit to Get Source SEZ SEZ Act Under Section 4 - Set up a sector specific Special Economic Zone for information technology and information technology enabled service at Village Gangaikondan, Taluka Tirunelveli, District Trunelveli in the State of Tamil Nadu; - Ntf. No. S.O. 2838(E) Dated: December 20, 2011 Visit to Get Source Central Excise Appointment of Central Excise Officers in relation to service tax refunds arising out of Notification No. 52/2011-Service Tax, dated 30.12.2011 - Ntf. No. 33/2011 Dated: December 30, 2011 Visit to Get Source Amends Central Excise Rules, 2002 - Ntf. No. 32/2011 Dated: December 30, 2011 Visit to Get Source Amends Notification No. 49/2008-Central Excise (N.T.), dated the 24th December, 2008 to affect the HSN changes w.e.f. 01.01.2012 Visit to Get Source Amends Notification No. 49/2008-Central Excise (N.T.), dated the 24th December, 2008 - Ntf. No. 30/2011 Dated: December 30, 2011 Visit to Get Source Amends Notification No. 21/2005-Central Excise, dated the 13th May, 2005 - Ntf. No. 45/2011 Dated: December 30, 2011 Visit to Get Source Amends Notifiication No. 26/2001-Central Excise, dated the 11th May, 2001 - Ntf. No. 44/2011 Dated: December 30, 2011 Visit to Get Source Amendment in the Various Notification - Ntf. No. 43 /2011 Dated: December 30, 2011 Visit to Get Source Amends notification Nos. 62/1995-Central Excise, dated the 16th March, 1995 and 20/2005-Central Excise, dated the 13th May, 2005 to affect the HSN changes w.e.f. 01.01.2012 Visit to Get Source VAT Banks Authorized for e-payment - Ntf. No. .F.7(400)/policy/VAT/2011/641-654 Dated: September 5, 2011 Visit to Get Source Notification regarding e-payment for registered dealers and TAN holders - Ntf. No. F.7(400)/Policy/VAT/2011/1006-1018 Dated: December 28, 2011 Visit to Get Source Case Laws: Income Tax 2011 (12) TMI 135 Validity of re-opening of assessment u/s 147/148 of the Act – assessee had not questioned the re-opening before the A.O. and the CIT – change in opinion of A.O. - Held that:- The relevant facts/materials were available before the tribunal, when the assessee raised the additional plea challenging the very initiation of re-assessment proceedings on the ground that the jurisdictional pre-conditions were not satisfied. No new or fresh evidence was adduced before the tribunal. If the jurisdictional pre-conditions are missing and are absent, the assessee can object and question the reopening in the appellate proceedings. Further, the tribunal has observed that no fresh material had come to the knowledge or information of the Assessing Officer after passing of the first assessment order. Therefore, this is a case of change of opinion as this issue in question was examined in the original assessment proceedings.- Decided against the Revenue 2011 (12) TMI 134 Addition on account of dis-allowance of interest and financial charges u/s 36(1)(iii) – Revenue contention that there is no co-relation between the utilization of borrowed funds and investments( selling off a segment of business to subsidiary & getting shares of it) made by it - Held that:- The Assessing Officer while disallowing the payment of interest and financial charges had failed to notice and given due credence to the fact that there was increase in interest payment this year, but the term loan and the credit facility had continued from the last year. Further, the assessee had declared a loss of Rs.1.88crs in the return filed for the assessment year in question. Lastly there are contradiction in the finding recorded by the Assessing Officer that involvement of the respondent in subsidiary company cannot be regarded as on account of business consideration.- Decided against the Revenue. 2011 (12) TMI 126 Waiver of penalty – non-violation of provisions of Section 269T - repayment under the Golden Bonds Scheme – Held that:- Payment under the Golden Bonds Scheme was not repayment of any deposit, but was repayment of a loan and there was no violation of Section 269T, as it stood at that time (before 1st June, 2002). Further, no payment by way of cash was made but book adjustments were made.- Decided in favor of assessee. 2011 (12) TMI 125 Deemed dividend – assessee received amount from its sister concern in oct 1997 claiming it to be business advance – advance to another sister concern transferred to assessee by book entry - assessee discontinued business from Oct 1997 – Held that:- On request of assessee the matter is remanded back to the CIT(A) with a direction to him to re-consider the matter afresh in the light of the Supreme Court decision in case of Commissioner of Income Tax Vs. Mukundray K. Shah (2007 -TMI - 6556 - SUPREME Court) and without in any way being influenced either by any observation made by him in the earlier order of revision or any observation made by court in this judgment and to pass appropriate orders in accordance with law. 2011 (12) TMI 124 Exemption u/s 10(23C) – Prescribed authority denied approval/ exemption - petitioner has to satisfy that it came within the expression “other educational institution” - Held that:- Merely on the ground that petitioner is not recognized by the UGC or any Board constituted by the Government of India for imparting formal education in the field of western music and that petitioner is not itself awarding any certificate or degree to the students, it cannot be said that it does not qualify to be an educational institution”. It is observed that the word education connotes the process of training and development of knowledge, skill, mind and character of students by normal schooling hence, petitioner meets the requirements of an educational institution within the meaning of Section 10(23)(c)(vi) of the Act. Therefore, the prescribed authority is guided to deal with the assessee’s application for approval afresh in accordance with law in the light of the observations made. The writ petition is accordingly allowed. Service Tax 2011 (12) TMI 132 Power of the Commissioner (Appeals) to remand - export of IT software - refund claim under Rule 5 of CENVAT Credit Rules 2004 read with Notification No. 5/2006 dated 14.3.2006 on input services used in the export of output services – Held that:- The Commissioner (Appeals) has examined and found nexus between the input services( viz telcom service, security agency, chartered accountant service etc) and the output services. In effect, the Commissioner (Appeals) has not remitted any issue on merits to be decided by the original authority. It is basically for quantification purposes based on the Chartered Accountant's certificate as envisaged in the Board's Circular dated 19.1.2010. - Decided against the Revenue. 2011 (12) TMI 131 Refund of service tax to include education cess - Held that:- Board's Circular No. 134/3/2011-ST dated 8.4.2011 clarifies since Education Cess is levied and collected as percentage of service tax, when and wherever service tax is NIL by virtue of exemption, Education Cess would also be NIL. In view of the above, Order-in-Revision passed by the Commissioner to recover education cess from the refund granted on the ground that the exemption was only in respect of service tax and does not cover the education cess cannot be sustained.- Decided in favor of assessee. 2011 (12) TMI 121 Plea for condonation of delay – rejection of appeal by Commissioner (Appeals) on the ground of limitation - Held that:- In this case, the delay is of 14 months and therefore the Commissioner has no powers whatsoever to condone the delay. Provisions of Section 85(3) are very clear and provide a specific time limit for filing appeal and therefore, if the provisions of Limitation Act are applied, the provisions of Section 85 of Finance Act, 1994 become redundant - Decided against the assessee. 2011 (12) TMI 120 Eligibility of availment of CENVAT credit of service tax paid on the services provided by the foreign person (Foreign Commission Agent) – Held that:- Board Circular F.No.345/1/2008-TRU dated 27.06.2008 clarifies that the recipient of the service is required to pay service tax under Section 66A though the service is not actually provided by the recipient but by the foreign person. Such taxable services, are not treated as 'output services' however, service tax paid under Section 66A is available as 'input credit' under CENVAT Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service. - Decided in favor of assessee. Central Excise 2011 (12) TMI 127 Classification of pleasure vessel – designed & registered as pleasure vessel - Casino and entertainment activity - Held that:- Vessel in question on one hand is classifiable as a cruise ship under heading 8901 and on the other hand it is classifiable as a vessel for pleasure under heading 8903. In such a situation the Rules for interpretation of the classification come into play. Since the Rule 1,2, & 3 (a) or (b) are not applicable in the present situation, it is found that under Rule 3(c) when the goods cannot be classified by reference to Rule 3 (a) & (b) they shall be classified under heading which occurs last in the numerical order among those which equally merit consideration. Therefore, it is more appropriately classifiable under heading 8903 of the Central Excise Tariff. Matter is remanded back to original authority for deciding issue relating to valuation of vessel, limitation whether there was any suppression of facts and imposition of penalty. - Decided in favor of Revenue 2011 (12) TMI 119 Credit of Service Tax in respect of courier services – period involved-April 2005 to October 2009 – Held that:- Courier services used for communication from factory to head office and the customers is definitely relatable to manufacture and thus admissible.
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